Ag trade ideas

Fundamentally long soybeans / short wheat is really risky. Wheat has a bigger potential supply risk( Ukraine, Winterkill, less acreage ) and it is oversold technically.
 
Question, looking at soybeans, the July/August spread is almost completely flat. Am I correct in saying in a perfect world, if you bought July and sold August there should be a low risk that the spread will drop much in value because July shouldn't sell for less than August minus the cost of carry for a month?

I found a chart online that looks like it put the cost of carry at around 5pts or $250 for a month of storage. Not sure if that is accurate or not, but that would mean the spread shouldn't go too far past the -5 area, right?

I'm showing 2006 and 2007 as being the only years in the past 10 that buying around 0 hasn't proven at least mildly profitable
 
Last edited:
A lot of AG markets have futures carry well below the cost of carry even when stocks are heavy
Andon the last years, soybean futures carry went down all along the season (maybe because exports were above expectations with really tight stocks)
 
Yeah, that is a good point. I figured there would be reasons as to why it would go past that level but wasn't sure what would cause it to go very far past the cost of carry. I put on a single spread at 1/2 last night. If it goes against me or stays flat for long I will just close it out.

Still haven't entered back into the KW/ZW spread, but following it closely.
 
What are your thoughts on the KW/ZW spread at this level? Not sure if this is a good buying opportunity, or a sign that the spread probably won't widen much from here.

Glad I did the Fly on ZM like you suggested and not just short the front spread like I originally considered. That would have been a decent hit.
 
You must log in or register to reply here.
Back
Top